Diesel prices surged across global markets on Monday as attacks on refineries in Russia and Saudi Arabia raised concerns over fuel supplies. The disruptions come after energy markets face pressure from geopolitical tensions and restrictions on key supply routes.
US ultra-low sulfur diesel futures rose by 7.4% on Monday to settle at $4.19 per gallon. This was the biggest single-day increase since July 13. European diesel refining margins also rose to 10%. Thus, highlighting growing concerns about refined fuel availability.
This latest rally came after an established attack on a refinery in the Russian Tatarstan region. The Houthis of Yemen also attacked the Jazan refinery of Saudi Arabia, which has been down since a July 27 attack. Its restart has been delayed from August 15 to 30, as reported by IIR Energy.
US distillate inventories, including diesel and heating oil, stood at 107.2 million barrels on July 31. That was the lowest level for this point in the year in three decades.
The diesel protest can have more serious economic ramifications since the fuel is used to run heavy-duty vehicles, agricultural equipment, construction machines, and manufacturing processes.
Farmers could face particular pressure as agricultural activity enters important seasonal periods in both hemispheres. Higher diesel costs can raise expenses for planting, harvesting, transportation and other farm operations.
Transport companies could also see operating costs rise if elevated diesel prices persist. Those increases may eventually feed into freight rates and the prices of goods that depend on road transportation.
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